Profits from rental property can be enticing George Kottaras World Baseball Classic Jersey , and current interest in investment homes is up from 2009 levels. But investors should consider alternatives.
The boom-and-bust cycles of real estate investing have affected UK buy-to-let landlords over the past 15 years. So where do things stand in 2015?
With about 14.4% (Q3 2014) of all mortgage lending in the buy-to-let market, it is best characterized as a time of crossroads. While demand for housing is at an all-time high due to a growing population and lagging new home building, the investor interested in renting out residential property has several variables to consider, such as proposed rent caps that were discussed in the 2015 election (not immediately likely given Labour鈥檚 defeat Freddie Freeman World Baseball Classic Jersey , but some ideas resurface over time).
Investing in real assets is not for the faint at heart 鈥?it can get messy when dealing with physical properties and the vagaries of tenants who sometimes make poor decisions or who encounter personal financial difficulties. For someone new to real property investing, it might make more sense to invest in a UK joint venture land opportunity, where the involvement ends (and returns on the venture realised) within a few short years.
This is not to say that privately rented properties cannot make money. Indeed they can, just as most investments in real property can be profitable in a country where an estimated one million households await housing and the population is growing. But there are several factors that make buy-to-let a tricky equation:
Property repair costs - Annually Eric Wood World Baseball Classic Jersey , the costs for repairs, refurbishment, cleaning, decoration and exterior maintenance can add up to 拢1233 per property Eric Gagne World Baseball Classic Jersey , according to a February 2015 study by Platinum Property Partners, a specialty firm in the buy-to-let business.
Administrative costs - The same study showed that letting agent management, finder fees, maintenance fees Dustin Molleken World Baseball Classic Jersey , service charges, mortgage interest (for those who do not own their properties outright), advertising fees to let and miscellaneous costs add up to $6,621 some years. This does not include 鈥渧oid鈥?periods between old and new tenants Daniel Pinero World Baseball Classic Jersey , which is when repairs and repainting are done.
Threats to cap rental increases - It was a hot political topic in the 2015 election as to what restrictions can be placed on landlords, largely focused on capping rental rate increases and guaranteeing tenancies of up to three years while creating barriers to removing antisocial tenants (so-called 鈥渞evenge evictions鈥?. Again, these ideas could be brought back.
Required immigration checks - Already, landlords in five council areas (Birmingham Dalton Pompey World Baseball Classic Jersey , Walsall, Sandwell, Dudley and Wolverhampton) are required under threat of a 拢3,000 fine to conduct immigration background checks Chris Leroux World Baseball Classic Jersey , asking for passports or residence permits (and knowing how to identify fraudulent documents). Resistant landlords complained to the Telegraph that this is an unnecessary burden and it should be the province of immigration control.
As mentioned, other ways of investing are not subject to these particular concerns. With REITs, the liquidity of buying and selling shares under normal income taxation rules is perhaps the polar opposite option. Investors who work with land fund managers might put their assets into a partnership that buys raw land, gets council use permission to build Andrew Albers World Baseball Classic Jersey , then makes money in a short term turnaround (1.5 to 5 years). The building and selling of homes to buyers of course serves a different market than renters.
Investments in any form of real property carry the hope of high returns - and yet risk is inherent as well. Contact an independent financial advisor to learn how the different options stack up in relation to your own financial planning strategies. Total Views: 198Word Count: 590See All articles From Author
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